Investors: Are you ready for Tax Time?
Property investors, unlike owner occupiers, are eligible for a very specific range of tax deductions, and most investors have a very vague knowledge of what they are actually entitled to.
All investors should get advice from a qualified accountant or the ATO to find out what you can and cannot claim at tax time, as preparing your own tax returns can very quickly become an overwhelming task.
Savvy investors also use this as an opportunity to take stock of the condition of their properties and do any pending or upcoming maintenance and repairs, as preventative measures. Remember - a well presented property attracts a better quality tenant in the long run! And if by chance, you do run into any tenancy hiccups, make sure you have Landlord Insurance with a reputable provider, to avoid being out of pocket.
Some of the expenses investors may be aware of include:
- Property Management fees
- Maintenance and repairs (like gardening, cleaning, etc)
- Various types of insurances (Landlord, Building, Body Corporate, etc)
- Travel for interstate site visits to your investment property
- Land taxes and interest on certain loans
- Council and water rates
- Advertising expenses for your property
- Depreciation of certain items
- Tax preparation fees
You may also be able to claim the cost of household items that your tenants have access to, including white goods, furniture and air conditioners. It is important to note that the full cost of each item probably cannot be claimed, as these items are subject to depreciation. In other words, the relevant deductions have to be claimed over a period of years based on the useful life of the item in question. This would be subject to a depreciation inspection and/or schedule conducted by a specialist.
But while there is clearly a range of expenses that you are able to claim, there are also a handful of things you either cannot claim or that cannot be claimed in the traditional sense. Take, for example, building and construction expenses. While these are not, generally speaking, a tax deduction, they can be claimed under the special building write-off rule (as advised by an Accountant).
Speaking with your Accountant and Managing Agency ahead of time, will leave you feeling prepared, and ideally, give you the opportunity to maximise your hard-earned dollars, to purchase further investments down the track. If you are concerned about any of the laws surrounding tax in Australia, the ATO has a very comprehensive list available on their website at www.ato.gov.au
If you’re thinking about purchasing an investment property on the northern Gold Coast, or already own one and aren’t happy with your current management, the expert team at Joe Farr Platinum Properties are here to help with all your buying, selling & renting needs. Call Joe & Joanne on (07) 5500 7000